Till Debt Us Do Part: Why Couples Need To Untangle Debt Problems

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10 Steps To Resolving Problem Debt Affecting Your Relationship

Arguments over money are the number one cause of stress within relationships and when it involves serious debt it can drive people to depression, divorce and family breakdown which is why seeking professional help to resolve problem debt is vital.

When breaking up involves debt (which sadly it frequently does), the experience is far from the amicable ‘conscious uncoupling’ that celebs Gwyneth Paltrow and Chris Martin allegedly achieved. Uncoupling may be pain-free when your biggest problem is who gets the Malibu beach house -  for ordinary families on modest incomes and with mortgage arrears and other debts, the process of unravelling joint finances and particularly joint debt is a fraught experience.

Jan Pahl author of ‘Money and Marriage’ and Professor of Social Policy at Kent University, wrote that money is the main source of controversy in marriage alongside intimacy or the lack of it. She also identified a key problem in that a family is not a single financial unit but is composed of several units that do not always work in harmony.

One-in-eight couples have run up secret debts

Reasons for lack of harmony over financial issues are manifold but research studies have uncovered several common issues that are a source of discord for couples, whether married or co-habiting. 

These include:

• secrecy about spending, saving and debt
• unequal balance of power in decision-making about money
• disagreement on financial priorities
• lack of planning for the financial future

Research by Prudential last year into the financial habits of 1,852 couples found that one-in-eight couples have run up secret debt: women are slightly more likely than men to keep quiet about or to hide debt (14% versus 12%) while men are more likely than women to have secret savings and investments (22% versus 16%). Surprisingly 14% had never told their partner how much they earn, perhaps less surprisingly 36% did not discuss debt before they married.

What can you do if your family is being torn apart by debt problems?

It is important for couples to have full knowledge and understanding of their joint financial affairs when trying to safeguard their home, resolve debt and to build a stable financial future for themselves and their families.

Often people begin relationships burdened by debt, sometimes from previous relationship breakdowns. Answering the question ‘Which came first the debt or relationship breakdown?’ can be as tricky as answering whether the chicken or the egg came first.

A more critical question if your family is being torn apart by debt is ‘What can you do about it?’ The good news is that you have a number of options, the first step is to admit you need help and seek professional assistance from a Personal Insolvency Practitioner (PIP). They are there to help not to judge and are used to dealing with sensitive and confidential matters.

Individual, joint or interlocking debt solution?

Resolving debt problems depends on your personal situation - if you are in or have been in a relationship, you are likely to have at least some joint debt or assets and it may be appropriate to deal with these jointly.

For two of the three formal debt solutions - Debt Settlement Arrangement (DSA) and Personal Insolvency Arrangement (PIA), there is an option to make a joint or interlocking application. Your PIP can advise you on what is best.

A joint application may be appropriate where two or more debtors are jointly liable for all debts to be included in a Debt Settlement Arrangement or a Personal Insolvency Arrangement.

An Interlocking application may be appropriate when two or more Personal Insolvency Arrangements are to be administered in common; usually because of the financial relationship of the debtors involved. You may be a couple, or business partners, or even both, and jointly liable for some - but not all - of the debts to be included in a PIA.

Data for the first quarter from the Insolvency Service of Ireland (ISI) show that 3% of DSAs and PIAs were joint and 39% of PIAs were interlocking - proving it is an approach that can work. In a PIA the average secured debt written off is 22.2% and the average amount of unsecured debt written off is far higher at 83.1% while for DSAs the average amount of unsecured debt written off is 76.4%. It shows that these solutions deliver positive outcomes.

10 Issues That Affect Debt And Relationships

1. Not reading all joint financial documents before you sign them.
2. Not disclosing income.
3. Leaving bills unopened or hiding debts
4. Not agreeing a family budget and sticking to it.
5. Not keeping track of joint or individual spending.
6. Not talking to each other openly about money
7. Not staying informed about joint financial accounts
8. Not having life cover to protect your family
9. Failing to seek financial as well as legal advice if your relationship breaks down
10. If you feel like you are drowning in debt - consult a Personal Insolvency Practitioner